Park District set to buy its HQ space

(Crain's) -- After a stint living the not-so-carefree life of a renter, the Chicago Park District is about to go back to owning its own house.

The switch will come with a hefty price tag.

The district's board of commissioners is scheduled to vote Wednesday on a proposal to spend $21.7 million to buy the roughly 110,000 square feet of office space it uses for its headquarters in the old Time/Life Building at 541 N. Fairbanks Court on the Near North Side. The district leased 117,000 square feet there in 2001 after its longtime headquarters at the north end of Soldier Field was demolished as part of the stadium's renovation.

Parks General Superintendent and CEO Tim Mitchell said the transaction will save the district $1.6 million a year. Much of the savings will come from not having to pay $60,000 a month in property taxes. The district didn't have to pay those taxes when 541 N. Fairbanks was owned by a state pension fund, but the building was acquired in April 2006 by units of Wachovia Bank in North Carolina and Chicago's Golub & Co. The district does not have to pay property taxes on property it owns.

Based on details of that 2006 sale, the district appears to be paying a premium.

The Wachovia/Golub group paid $61 million for the entire building, or $112.62 per rentable square foot, according to CoStar Group Inc., a real estate research firm. The park district's price comes out to about $199 per square foot -- about 77% more than Wachovia/Golub paid less than two years ago.

Mr. Mitchell says the proposed purchase is "a good deal" for both the district and taxpayers.

Before moving ahead with its plans, the district solicited bids from owners of other buildings and hired an appraiser who said the price was fair, he said, adding that Wachovia/Golub originally wanted $35 million for the space.

Moving elsewhere would have involved millions of dollars in relocation costs, he said, and the district would be on the hook for rent at 541 N. Fairbanks until its lease expired in 2013.